Do We Still Need to Ban U.S. Oil Exports?
Summers vs. Markey on the U.S. oil export ban
Former Treasury Secretary Larry Summers
“If we allow oil exports, the price received by U.S. producers will rise, which will lead to more production—meaning more employment and investment. Permitting the export of oil will actually reduce the price of gasoline.
“Oil that’s made into gasoline is oil that’s [largely] imported. It’s tied to Brent [crude], the world benchmark, which is $5 to $10 higher than U.S. oil in West Texas. U.S. exports would raise the supply of Brent. The same demand and a larger supply means a lower price. It’s the rare policy that stands a good chance of benefiting producers and consumers.
“Exports will create the need for infrastructure, which will create jobs. Optimists think this could mean as much as 1 percent more GDP by the end of this decade. To generate just half a percent more with fiscal policy would require an extra $60 or $70 billion a year. That’s not likely to pass, and if it did it would have substantial debt consequences.
“A lower trade deficit will mean a stronger dollar, will mean lower-priced imports, which will make America richer. As an oil exporter, we’ll have the kind of leverage other oil exporters wield. By producing more oil and exporting it, we put downward pressure on prices, which is the most important sanction we can engage in with response to Russia and the Middle East.”
Senator Ed Markey (D-Mass.)
“We’re still importing a third of all the oil we consume, nearly as much as when the ban was put in place 40 years ago. That vulnerability helped infuse oil into our foreign policy, our economy, and our national security unlike any other product. We would be shortsighted to treat oil like any other commodity. The government projects U.S. oil production will peak at 9.6 million barrels a day in 2019, and we’ll still be importing 3 to 4 million barrels of oil a day. That’s a vulnerability we should focus on mitigating rather than talking about exporting oil so producers can make more money.
“Allowing exports will raise the price of domestic oil, but there’s no guarantee it will lower the international price of oil. It could simply raise U.S. prices to the level of the international market, which will lead to higher gasoline prices in the U.S.
“There are billions of dollars of refinery capacity additions and upgrades in the works today. That’s why the U.S. steelworkers and the thousands of their members who work in refineries support the ban. If we export our oil, we export thousands of U.S. refining jobs rather than letting the market work to increase U.S. refining capacity. Lifting the ban is a mistake on so many levels. Why would we want to export this huge asset when we have such an incredible chance to make ourselves more energy-independent?”
Edited and compressed for space. Summers’s comments are in part from a Sept. 9 Brookings Institution speech.